CEO Andrew Burke says business is now in “growth phase” of turnaround but admits that some job losses cannot be ruled out as it seeks to “rationalise expenses”.
by Sian Barton
Das CEO Andrew Burke has admitted that the Das results for 2016 are where he and parent company Ergo/Munich Re “expected them to be”.
The results showed an increased operating loss of £17.4m but premium went up and COR improved.
He stated: “No one enjoys posting a loss. What I am pleased with are the underlying trends.”
Looking ahead, Das stated in their results stated that the insurer is planning on “rationalising operational expenses” to improve performance.
Asked if this means that staff numbers would be impacted Burke stated: “We will look to optimise the cost base. In the business we have a level of staff turnover and we hope to use the natural turnover.
“However we can’t cross off the prospect of job losses.”
Burke explained that the 2016 losses (loss after tax was £13.7m) were caused by three factors which all cost the business about the same amount – roughly £4.5m.
Firstly, “there was the investment we made in fixing the fundamentals”. Secondly there was the impact of some underlying performance.
Burke noted that some business had been put into run-off and Das was still feeling the impact of some claims costs. In addition he admitted that the business wrote some “poor ATE business in 2013 which is coming through now”.
Finally, the third element was the impact of its reinsurance quota share agreement with Ergo/Munich Re.
Burke explained that in 2015 Das ceded 30% of premium and claims to Ergo/Munich Re in order to improve its capital position. Money ceded will show in the Ergo/Munich Re results. In 2016 this changed to 70% affecting the final Das result.
Burke revealed that this figure will change to 90% for 2017.
James Henderson, managing director for Das UK & Ireland explained that the picture was growing more positive and trust in the insurer was growing.
He was pleased to report that Standard and Poors had rated as Das A+ and stable, something Burke noted was a “reflection of confidence”.
Henderson continued: “The first bit [around trust] is financial stability. The Standard and Poors rating is a big symbol of that.”
The MD also said that the second piece of work was about becoming easier to work with for brokers and other partners.
“It is about being easiest to do business with,” he said.
Burke stated that the first two elements – stabilisation and fixing the fundamentals – of the turnaround process were now “mostly complete” and it is now looking to grow.
He revealed that in quarter two next year the business is hoping to launch a new e-trade solution and in Q3 a home and cyber legal expenses policy will be launched. He declined to share further details on these initiatives but promised to talk more when the business is ready.
The business has also teamed up with an undisclosed broker on schemes.
Burke said Das is on track to improve underlying performance in its 2017 results and expected growth in premium and COR improvement to continue.
He added: “By 2018 we will break even or even make a small profit.”